Should you buy identity theft insurance?

Peter Gerrard, head of insurance research at price comparison site moneysupermarket.com, said: “With the shocking news of 25 million people potentially having their personal and banking details in the hands of criminals, consumers need to consider how they can protect themselves.

“There are a number of “so called” identity theft products on the market. Some of these are stand alone and some come bundled (often at extra cost) with other products, including home insurance, credit cards and current accounts.

“Many of these products are dubious value for money. Most will cover losses if fraudulent transactions take place. However, if consumers are vigilant and report any unusual activity to their bank or card provider these losses will be covered by the provider as a matter of course anyway.

“Other policies will provide credit reports and fraud alerts. Whilst these are useful they are no substitute for account holders being vigilant – for example by checking statements regularly.

“The real cost of having your identity stolen or cloned is the time, stress and effort it takes to resolve the situation. Clearing your name and credit record, closing compromised accounts and opening new ones, as well as freeing up any cash that may be locked in compromised accounts often takes a huge toll on people.”